Travel rewards cards are among the most popular types of cards out there — for obvious reasons.
Want a free trip to Paris? Check. Want three free nights at a five-star hotel in a large metropolitan area? Check. Want free luggage check, airport lounge access and priority boarding? You got it.
For the savvy rewards card user, travel rewards cards offer numerous benefits — in dollar terms and in the form of great travel perks. And if you have excellent credit, you can pick and choose among dozens of cards.
But it’s not always easy to figure out how to find the best card for you. This is especially true these days when so many travel rewards cards offer increasingly flexible redemption options — further blurring the boundaries between different rewards card categories.
Here is an overview of the main types of travel rewards cards and what to look for when searching for the best rewards card for you.
Airline credit cards
As the name implies, airline credit cards let you accumulate rewards earnings toward free flights. These cards fall into two categories: Co-branded and generic.
Co-branded airline credit cards
Co-branded airline credit cards, or frequent flier credit cards, are cards issued in partnership with a specific airline. Cardholders get higher rewards earnings on purchases with the sponsoring airline, and rewards miles are added to a cardholder’s frequent flier account with that airline.
Examples of cards in this category include the American Express Delta Skymiles card, the United Mileage Plus Explorer card and the Southwest Airlines Rapids Rewards Plus credit card from Chase.
Pros: With airline-specific rewards cards, you earn miles from travel — and from credit card charges. Airline rewards cards also offer special deals on hotel stays, car rentals and vacation packages, enabling cardholders to reach the rewards threshold for a free ticket more quickly.
In addition, airline credit cards tend to come with generous sign-up bonus offers — often worth a free ticket or more. Premium cards also offer a great lineup of travel perks.
Cons: If the sponsoring airline doesn’t serve your area well, airline-specific rewards cards aren’t of much use. In addition, most co-branded airline miles credit cards charge an annual fee, which can run as high as $150 or higher. Further, redemption options for rewards miles are often limited to the co-branded airline, and there may be travel blackout dates, making it harder to find free trips on the times you desire to travel.
Generic air miles credit cards
Generic air miles credit cards are issued by banks alone and not in partnership with specific airlines.
For these cards, the card issuing bank will either allow you to use rewards earnings to reimburse flight purchases made to the card, or they may take the cash value of the rewards earnings and let cardholders book tickets through a travel booking agency.
Pros: Redemption options are potentially unlimited. There are no restrictions on which airlines you can fly with, nor are there restrictions on dates or times. Miles earnings are simply converted into a cash value to pay for the ticket, typically at a rate of one cent per mile. In addition, many generic air miles rewards cards come without an annual fee.
Cons: It may take longer to earn free tickets because rewards earnings only accumulate on card charges, not on airline travel or other travel-related activities. In addition, these cards don’t offer the travel-related perks that airline-specific rewards cards do.
Cross-over options: Some generic airline credit cards let cardholders have the best of both worlds. For example, the Chase Sapphire Preferred card ($95 annual fee) lets cardholders transfer points to miles on the frequent flier programs of major airlines, such as United, Continental, US Airways and more.
Hotel rewards cards
As the name implies, hotel rewards cards are credit cards co-branded with specific hotel chains. These cards may not be as sexy as airline credit cards that promise free travel to exotic locations, but don’t be fooled. Many hotel rewards cards offer a surprising range of rewards benefits and are definitely worth a look.
Examples of cards in this category include the American Express Starwood hotel rewards card, the Marriott Rewards Premier card and the Citi HHilton Honors card.
Pros: Generous sign-up bonuses are a hallmark of hotel rewards cards: Most feature sign-up bonuses redeemable for up to three to six free hotel nights, which can quickly turn into a considerable value, depending on where you stay.
Cons: To get the most out of hotel rewards cards, you have to stay at the sponsoring hotel chain. However, for people who don’t travel that much, marrying yourself to one hotel chain may not make sense. In addition, most hotel rewards cards charge an annual fee, waived the first year.
Cross-over options: Some hotel rewards cards offer great cross-over options that make them worthwhile, even if you don’t stay that much with the sponsoring hotel chain. The American Express Starwood card, for example, lets cardholders redeem rewards points for free travel on 350 partner airlines.